Total has agreed to sell a stake of 4% in the Ichthys liquefied natural gas project (Ichthys LNG project) in Australia to operating partner Inpex for $1.6bn.
Image: Total to reduce stake in Ichthys LNG project. Photo: courtesy of INPEX.
Subject to Australian regulatory approvals, the transaction will bring down Total’s stake in the Ichthys LNG project, worth around A$45bn ($33bn), to 26% while increasing Inpex’s stake to 66.245%.
According to Total exploration & production president Arnaud Breuillac, the sale is being taken up as part of the company’s constant portfolio review to streamline its capital allocation.
Breuillac said: “Ichthys is part of a wave of Australian LNG projects, which have unfortunately experienced major cost overruns and delays during their construction phase. The final CAPEX estimate provided by the Operator is around 45 B$ to be compared to an updated figure around 40 B$ in 2017.
“In line with our capital discipline policy, we have therefore decided to control our capital employed in Ichthys by monetizing a 4% stake after the project start-up and de-risking.”
The Ichthys LNG project, which is located about 220km off the Western Australian coast, has been in production of gas since late July. The project involved development of the Ichthys offshore gas and condensate field, which is contained in water depths of 260m, and also addition of an 889km gas pipeline.
First condensate shipment, made up of ultra-light crude oil, was shipped from the LNG project on 1 October 2018. A few days later, the first LNG shipment was made, which was followed by shipment of liquefied petroleum gas (LPG) in November.
Inpex expects the Ichthys LNG project to ramp up its production volume of LNG gradually, and produce nearly 8.9 million tons of the commodity per year. It is equivalent to more than 10% of the annual LNG import volume of Japan’s, once the project reaches its production plateau.
Inpex, in a statement, said: “As approximately 70% of the LNG produced by the Project is scheduled to be supplied to Japanese customers, INPEX will further contribute to the stable supply of energy to Japan through the Project and continue to respond to the energy demand in Asia and the rest of the world.”
Apart from Inpex and Total, the other stakeholders in the Ichthys LNG project include CPC Corporation (2.625%), Tokyo Gas (1.575%), Osaka Gas (1.2%) and Kansai Electric Power (1.2%).